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Investing.com - Goldman Sachs has upgraded Indra Sistemas SA (BME:IDR) stock rating from Neutral to Buy and raised its price target to EUR45.00 from EUR33.00, citing expected benefits from increased European defense spending.
The investment bank believes Indra is positioned to capitalize on a "structural multi-year ’mega trend’" in defense spending across Europe and Spain. Goldman Sachs expects this trend to significantly benefit Indra’s defense business, which represents approximately 20% of FY24 revenues and 40% of EBIT.
Goldman Sachs projects Indra’s defense segment will deliver approximately 22% revenue CAGR and 21% EBIT CAGR over 2025-29. This growth is expected to come from Indra capturing between 6% and 27% of total contract value from 30 defense programs in Spain, which aims to increase defense spending to 2% of GDP this year from 1.3% in FY24.
The bank also notes additional revenue opportunities for Indra in European countries outside Spain, particularly through joint ventures and partnerships. Goldman Sachs believes the market "significantly underestimates" Indra’s ability to benefit from this defense contract flow.
Goldman Sachs’ financial projections for Indra’s FY27-29 revenue, EBIT, EPS, and free cash flow are 4% to 12% above Visible Alpha Consensus Data, supporting the increased valuation multiple for the Spanish technology and defense company.
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